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Euro jitters and Budget 2012 dull consumers' moods

The KBC/ESRI index has shown that Irish consumer sentiment fell considerably in December.

Image: Sasko Lazarov/Photocall Ireland

IRISH CONSUMER SENTIMENT fell dramatically in December as increased uncertainty about the euro and Budget 2012 dampened the holiday spirit.

THE KBC/ESRI Consumer Sentiment Index also revealed that people fear a sustained squeeze on household spending power in the coming years.

The index fell from 60.1 in November to 49.2 last month, the largest monthly drop since August 2001.

“The fall in consumer sentiment in December takes the index back to where it was at the start of the year,” said David Duffy of the ESRI.

In December, consumers were primarily worried about the outlook for their household finances and the outlook for the economy over the next 12 months.”

The decline in consumer’s perceptions of current conditions fell from 80.1 in November to 74.2 in December.

December’s figures come after an “abnormally large” rise in October.

“Such sharp gyrations are extremely unusual in the sentiment survey,” read the report. “Two extremely large and opposite changes within three months suggests something out of the ordinary is happening.”

Although this could be explained from sampling issues, the conductors of the survey could not find any technical issues and said another possible reason is that the volatility in the survey directly reflects the uncertainty facing Irish consumers.

Commenting on the large swings, Austin Hughes of KBC said:

During the December survey period, the very existence of the Euro appeared in doubt.  In addition, as a wide range of spending cuts, tax increases and new charges introduced in Budget 2012 were debated, the prospect of declining spending power for the next couple of years likely unnerved many.

It will probably take at least another couple of months before consumers can decide whether the fears they signalled in the December sentiment survey prove to be exaggerated or become a painful reality.”

Read: Retailers pessimistic about 2012, says IBEC>

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